9.15am: Today it's the Ukip annual conference and I was up early to get on a train to Birmingham. I've never been to a Ukip conference before. In fact, only a few years ago, any half-decent political correspondent volunteering to attend would have been dismissed by colleagues as an eccentric. That was in the era (2006) when David Cameron dismissed them as "fruitcakes, loonies and closet racists, mostly". Now they are still a minor party and they don't have any MPs. But they came second in the European elections in 2009, they are level-pegging with the Lib Dems in the polls and they exercise a potent influence on Conservative party politics. Anyone interested in the British political scene would be foolish to ignore them.

My colleague Martin Kettle explored this in detail in his Guardian column yesterday. He argued that, as the 2015 election approaches, there are two key reasons why Ukip matters.

The first is the Ukip factor itself. From 2009's 16.5% in the Europeans, Ukip slumped to 3.1% in the 2010 general election. A disastrous fall? Undoubtedly. The party crumpled.But that 3.1% – still nearly a million votes – may have made some of the difference between a hung parliament and an outright Tory win. Small though it was, the Ukip vote exceeded the majority in 21 marginals the Tories failed to win in 2010, including Ed Balls's seat in West Yorkshire. If Ukip does as so many expect, and fares even better in the 2014 Europeans than in 2009, the Tory fear of a palpable Ukip effect in the 2015 general election will be even greater than before, even if Ukip's vote tanks again as it did in 2010. Any Conservative with a majority of 1,500 votes or fewer may be at risk.

The second reason why Ukip success matters is because of Britain's place in post-eurozone crisis Europe. The competition between the parties on whether to promise an EU referendum – and, crucially, what question it would ask – is already intense behind the scenes. Every Ukip success is likely to push that competition further towards an in-out referendum pledge. Even if that does not come about – and a referendum on a less cut-and-dried choice of the sort that is apparently preferred by David Cameron would certainly cause problems for Ukip – the momentum of the whole process is towards increased UK marginalisation within whatever remains of the EU.

At the Ukip conference in the Birmingham town hall today, the highlight will be the speech by Nigel Farage, Ukip's leader. Farage was on the Today programme at 8.10 this morning talking the possibility of a doing some kind of deal with the Conservatives before the next general election. I'll write a full post about his comments soon. He will be speaking at 11.45am.

But I will also be writing about the rest of the conference too. It opens at 9.45am and the full agenda is here. Ukip has in the past been vulnerable to charge that it's a one-man band, the Farage party, an outfit whose success is largely dependent on the efforts of one accomplished campaigner in a pin-striped suit. Today I want to see what the rest of them look like close up too.

If you want to follow me on Twitter, I'm on @Andrew Sparrow. I won't be updating this blog quite as regularly as I normally do when I'm writing my daily Politics Live, but there should be updates at least every hour.

9.28am: Nigel Farage has been talking this morning about the possibility of Ukip doing some kind of deal with the Conservatives before the general election. His message has not been entirely clear.

At Euston this morning I picked up a copy of the Daily Express. It's not normally the first paper I turn to in the morning, but it has become the Ukip house journal and, sure enough, there on page two was a story about the speech Farage will give today. Here's how it starts.

UKIP leader Nigel Farage will today make a dramatic offer to David Cameron to form a pact with the Tories at the next General Election.

He will use his keynote speech at Ukip's annual conference to raise the prospect of an alliance at the polls.

But he will demand in return the promise of an in-or-out referendum on Britain's membership of the EU.

But then, when Farage was asked about this in his interview on the Today programme, this is how he started his reply.

I haven't offered a deal at all. What has happened here is in Tory circles they fear that the Lib Dems will move to the Left and will head towards Labour, leaving the Conservative party very exposed. They look at Ukip at 10% in the polls and they say 'we've got to do a deal with Ukip'.

Farage then went on the clarify his position, in a way that stands up the Express story. I've taken the quote from PoliticsHome.

I'm responding to many voices within the Conservative party, and what I've said is we're a different party with a different manifesto, but if we were offered a deal that made it easier to push open a door marked 'independence for the United Kingdom' of course we'd consider it.

But I wouldn't even contemplate doing a deal, even if it gave the party an advantage, unless we first had, written in blood I think, an absolute promise that we would have a proper referendum on our relationship with the EU.

As Macer Hall says in his Express story, there are some Tories who want their party to form some kind of non-aggression pact with Ukip at the general election.

Tory Euro MP Daniel Hannan said yesterday: "I'd like to move to a position where people who vote Ukip and people who vote Conservative at the moment can support the same candidates."

Earlier this week, senior Tory MP Brian Binley wrote on his internet blog: "Support for Ukip is growing. Conservatives and Ukip share a lot of common ground on Europe and a re-alignment with supporters of Ukip on the issue might also help win back some of the voters who abandoned us for them after the last election.

"We can't keep patronising Ukip as extremists. They represent the strength of feeling on an issue that is so important to the British people."

But on Twitter the Tory MP Therese Coffey said that Farage seemed to rule out a pact with the Conservatives only five days ago, when he was interviewed on the Westminster Hour. She's got a point. I've been listening to the programme and this is what Farage said when he was asked if Ukip would stand down at the next election in seats where Tory candidates were calling for an in/out referendum on Britain's membership of the EU.

No. Our intention is to fight every seat in the country at the next election. We are not just about Europe. We are about how we re-invigorate Britain once we've left.

10.20am: I've arrived. The press room at Birmingham town hall obviously doubles up as a broom cupboard, and so I'm inside the main hall itself, perched near the top of the balcony. According to Ukip, around 900 members are coming to the conference and there must be several hundred in the hall already. I couldn't get a seat downstairs. As I type, Mike Read, the former Radio 1 DJ, is speaking. He's already mentioned Churchill, and I've only been here five minutes. And he's winding up now.

It will soon be time to say once more: "The long night of European darkness is over. Good morning, Great Britain."

You get the gist ...

10.52am: Nigel Farage will be speaking in about an hour's time. Before he starts, here's a Farage reading list.

The appearance of coherence is the genius of Nigel Farage. Farage is one of Britain's great everyman conservatives, with an innocent, unblinking expression that suggests a pug being gently squeezed from its middle. Like Boris or Nadine, "Nige" is an anti-politician. He visits lap dancing clubs, smokes, drinks and is alleged to have had an affair with a Latvian woman he met in a pub in Biggin Hill. The ordinariness defuses the potential extremism of UKIP's manifesto and injects some real world outrage into politics. There are too few conservatives like him left – men in camel hair coats who would abolish the income tax and swap the Channel Tunnel for a brick wall. But such is the power of Farage's joyful libertarianism that I wonder if UKIP would survive without him. It could either split into philosophical factions or, as it did under Lord Pearson, simply fail to generate attention.

The Ukip leader has had testicular cancer, led his party before, stopped leading it, nearly died in a plane clash (while campaigning during the last election to win the Buckingham seat held by the Speaker), and come back to lead Ukip again. In other words, he is a tough old thing who gives his turbulent party momentum by sheer force of character. His contempt for Messrs Cameron and Osborne would curdle low-fat milk but, significantly, doesn't extend to the older generation of senior Conservative politicians, of whom he speaks with guarded respect. His plan is evident: to gain the In/Out EU referendum that would split the Conservatives in half, and to realign British politics, much as the Common Market referendum of 1975 did.

After all, a new force eventually emerged from the cross-party alliances formed during that referendum – the SDP. The Ukip leader evidently hopes that similar co-operation during another referendum would bring a similar outcome – that a No vote and Tory splits would divide the Cameroon leadership of the party from its base. The latter, joined with Ukip, would then morph to become the full-blooded Thatcherite party that even Lady Thatcher herself never quite led. Hence his recent decision to drop the party's long title and replace its pound-sign symbol. Hence, too, Ukip's support for grammar schools and opposition to gay marriage. Mr Farage is trying to wean his party off the EU issue alone, woo traditional Tory voters and park his guerrilla army on Mr Cameron's lawn.

11.16am: And here are some more lines from the various interviews that Nigel Farage has been giving this morning, in addition to the points he was making about the (very, very remote, it sounded to me) possibility of a pact with the Conservatives at the election. (See 9.28am.) I've taken the quotes from PoliticsHome.• Farage said he had more respect for Boris Johnson than for any other leading Conservative politician.

I have to say I have a great regard for Boris, he is the only leading Conservative figure who stands up and says things that many UKIP members agree with ... When I hear him talking about the City of London and the fact that it is a rather valuable asset, he is closer to us, but he's not quite UKIP yet.

• Farage said Ukip were rightwing on some issues and liberal on others.

I think on economics, you can put us on the centre-right. But on issues of liberty - we're the party that believe in habeas corpus, we're the party that wants a smaller state. In that sense we're classical liberals.

• He said that most people joining Europe were coming over to the party from the Conservatives.

I think we have, since the last general election, got the Conservative party worried. A lot of people have come to us; some from the Lib-Dems, some from Labour, but the bulk that have come to us in the last two years from the Tories. They look at David Cameron and what they see is another brand of social democracy.

• He said Ukip's politicians had more real-life experience than the government's.

I think people think we're being run by a bunch of college kids. They look at UKIP and think, well they may not be perfect, but at least it's led and full of people who've run businesses and got experience of life.

• He said Nick Clegg would probably be gone as Lib Dem leader within two years.

• He claimed that schools do not teach pupils about British history or Christianity.• He claimed that 75% of British laws originate from Brussels.

• He said that Ukip wanted to spend more money on defence because the cuts to the armed forces were "absolutely shameful".

• He said too many 18-year-olds were going to university.

• He said Ukip wanted a 31% flat tax on all incomes over £11,500. National insurance would be abolished under Ukip, he said.

All measurements have their problems. To exclude EU regulations from the calculation is likely to be an under-estimation of the proportion of EU-based national laws, while to include all EU regulations in the calculation is probably an over-estimation. The answer in numerical terms lies somewhere in between the two approaches, and it is possible to justify any measure between 15% and 50% or thereabouts. Other EU 'soft law' measures under the Open Method of Coordination are difficult to quantify as they often take the form of objectives and common targets. Analyses rarely look into EU soft law, the role of EU standard setting or self-regulatory measures.

11.38am: Back in the hall, Lord Hesketh is giving the warm up speech for Farage. Hesketh is one of Ukip's prize defectors; he was a minister in the Thatcher government and chief whip in the Lords under John Major, but left the Conservatives for Ukip last year. He mentions Neville Chamberlain (his grandfather was Chamberlain's PPS, he says) and he says Chamberlain deserves credit for keeping Britain out a slump in the 1930s because he spent money on rearmament. He says the whole of Europe is becoming disenchanted with a political class that cannot be trusted to tell the truth, and he suggests that Europe needs an 1848-style revolution.

He says Britain could have a perfectly good free-trade agreement with the European Union. There should be an in/out referendum, he says.

12.07pm: Nigel Farage is speaking now.

Something has changed, he says. At the general election Ukip got 3% of the vote. But now they are up to 12% in some polls, he says.

What has changed? They have been lucky with their enemies, he says.

But it is not about individuals. People look at the three parties. "They look the same, they sound the same." And they look like college kids, he says.

Ukip is run by people with some understanding of the real world.

Ukip has also got better, he says. In the 1990s "it was a bit shambolic". But now it is more organised. It came second in the Barnsley byelection.

The Human Rights Act has turned justice on its head. People want a debate on that, he says.

People support Ukip because they see it as the voice of opposition on a whole range of issues, he goes on.

12.10pm: Farage says Ukip is "not a one-trick pony".

It is reaching out to people concerned about things like windfarms.

But Europe is the key issue, and it is rising to the top of the agenda.

This week José Manuel Barroso, the president of the European Commission, gave a speech that let the cat out of the bag. He used the f-word (federation) for the first time.

The EU wants a constitutional change that would rule out the need for further referenda, he says.

Farage says Barroso called him "an extreme populist". And he said Ukip was irrelevant to the main debate.

Well, Mr Barroso, it is Ukip's intention to make you eat those words.

That gets the biggest round of applause so far.

He says the new treaty proposed by Barroso is so extreme that no UK party would back it. Even the Lib Dems would not support it, he says.

So a referendum on this question is inevitable, he says.

People might argue that that is good news.

But Farage says he is "very worried" by what he sees.

From David Owen to Liam Fox, we now see the political class uniting behind a political position.

There is growing support for allowing Britain to be part of a customs union with the rest of the EU.

He says Cameron will propose a referendum on whether Britain should be part of the full federal EU, or whether it should just be part of a customs union.

But this would stop Britain negotiating its own customs agreements with the rest of the EU, he says.

Farage says he wants Britain to be able to have a free trade deal with the Commonwealth. (This gets a very big round of applause too.)

12.17pm: Farage says the EU wants Britain to have an "open door" to the whole of eastern Europe.

That would be irresponsible with unemployment as high as it is.

And Britain should not be subject to the European court, he says.

That's why there needs to be a full in/out referendum.

12.19pm: Farage turns to the issue of a deal with other political parties.

Some of the press reporting is wrong, he says. Ukip is a full, independent party.

But Ukip would be "silly" not to consider something that might bring closer the chance of an in/out referendum.

All this talk of a deal with the Conservatives has not come from me. It has come from the Conservatives.

Clegg will go to Brussels before the 2015 election to replace Lady Ashton, he says. Under Vince Cable, the Lib Dems will float the idea of a deal with Labour. In those circumstances, if Ukip are 10% in the polls, the Tories will want to do a deal, he says.

Farage says he has worked to build up Ukip. He would not do anything to jeopardise its identity, he says.

Even if the Tories were to promise a referendum, that might not be enough. Some politicians do not keep their promises, he says. Any deal would have to be "written in blood".

12.23pm: Farage says Ukip has not yet made a breakthrough in local elections. But next year it will fight more seats than ever. And it will use those as a springboard for the European elections, he says.

Ukip's goal will be to win those elections. He will work night and day to achieve that, he says.

12.26pm: The Farage speech is over. I will post a summary shortly.

12.58pm: The conference theme music seems to be XTC's "Making Plans for Nigel". They played it at the end of Nigel Farage's speech, and it has been blasting intermittently through the main hall ever since. It's almost as catchy and annoying as the Clegg "sorry" song.

1.20pm: Here are the main points from Nigel Farage's speech.

• Farage said that Ukip's priority now was to ensure that Britain had a full in/out referendum on membership of the EU, not just a referendum on Britain having a looser relationship with the EU. None of the main political parties is yet fully committed to an EU referendum, but David Cameron has strongly signalled that the Tories would call one after the next election and it is widely assumed that the plans to renegotiate the EU treaties in the light of the Eurozone crisis will eventually lead to British voters being given a say on any new arrangements. Farage said a referendum was inevitable. But it was not the referendum Ukip wanted, he said.

I'm very, very worried about what I see. From David Owen to Liam Fox, what we're now seeing is the political class uniting around a position. The position is that we don't want to be part of this new federal superstate, but we do want to be part of the customs union, and we do want to be part of the single market and that there's nothing to fear from all those things because we won't be trapped inside a political union with Europe.

Well, I've decided to take that on and I've launched a booklet called A Referendum Stitch-up. Because what is happening is remarkably similar to what happened back in 1975 … when you were told it was a common market. They are trying to do the same thing again.

I think what Cameron will do, next week or the week after, is to say we can have a referendum on whether we join that full federal union, or whether we stay with the single market and a customs union. And that is a battle for us. We have got to go out there as a party and make the arguments. We don't want to be stuck inside a customs union that prevents us from making our own trade deals with the rest of the world, the growing parts of the world ... We in Ukip demand that this country is given a full, free and fair choice in a referendum, so that we can decide who governs Britain.

• He played down the prospects of Ukip entering into some form of electoral pact with the Conservatives before the general election. Ukip was an independent party, with its own agenda and its own candidates at elections, he said.

But if an opportunity came which meant we could get this country closer to walking through a door marked 'UK independence,' if we had the opportunity to do something that was in our national interest, we would be silly not to even consider it.

Farage said that talk of an electoral pact was coming from the Conservatives and that he personally would do nothing to "sell this party short".

The only way we would even consider a negotiation of any kind at all would be if first an absolute promise was made to give this country a full, free and fair referendum so that we could decide whether we remain members of the EU or not. That would have to be on the table before we even considered any proposal.

And we would possibly have a problem even then. Some of you may have noticed that there are one or two people in politics who make promises and then break them. So I don't think a cast-iron guarantee would satisfy Ukip. At the minimum, it would have to be written in blood.

What does "written in blood" actually mean? The only plausible interpretation must be "written in statute" - ie, the government would have to pass legislation before the 2015 election for a referendum afterwards. The chances of that are minuscule.

• He said Ukip's aim was to win the European elections in 2014.

By then we may well have the bones of a new treaty. We will have a political class doing their best to ignore the issue, doing their best to give us a fudged, stitched-up referendum. I think we will be in the driving seat for those European elections. I believe it must be Ukip's aim and goal to win those European elections in 2014, to cause an earthquake in British politics and to change the future of this country forever.

1.58pm: In the past Ukip never used to receive much media attention, but this year it's rather different. There's a respectable media contingent, including the Today programme's Evan Davis and Channel 4 News' Michael Crick. Crick has been commenting on Twitter.

One of great things about UKIP conference is how it glories in its eccentricity - Union flag ties, colourful waist-coats, great moustaches

2.22pm: Tim Congdon, the economist, has just finished addressing the conference. He has recently produced a 56-page report called How much does the European Union cost Britain? and it claims that EU membership costs Britain around 10% of GDP, or £150bn. It is the latest version of a report that Ukip has been producing annually and Congdon said that he wanted it to become "the best document produced by a political party in the country".

Congdon attributes half the cost - 5% of GDP - to regulation. I haven't had time to read the whole document, but his methodology seems open to challenge, to put it politely. In the chapter on the costs of regulation, he quotes an EU commissioner in October 2006 putting out a statement "which invited the interpretation that the annual cost of EU regulation was 600 billion euros, or 5% of GDP". Perhaps it invited other interpretations too, but I don't know because I have not had time to check. And the report also says that Peter Mandelson told the CBI in 2004 that EU red tape cost 4% of GDP. After a quick search, I've been unable to find the quote to back it up. Does anyone have the link? I used to cover CBI conferences regularly during that period and, if Mandelson did say that, I think I would have remembered.

I think they [the Eurocrats] hated your prime minister so much that they decided to do exactly the opposite in every single detail ... Where there is harmony, they will bring discord. Where there is truth, they will bring error. Where there is faith, they will bring doubt. And where there is hope, they will bring despair.

4.05pm: So, what have we learnt? In news terms, I think I have already summarised the main points. (See 1.20pm.) But the attraction of coming to a party conference is to see what a party looks like close up and, in that respect, coming to Birmingham has been worthwhile. It is refreshing to come to a party conference that is not swamped by corporate lobbyists and PR executives in smart suits. There are none of those here, just hundreds of (mostly quite elderly) party activists. And, even if Ukip isn't your cup of tea, it is generally invigorating to spend time in an environment full of people with a passion for their politics and strong views. It's not always like that at the main party conferences.

As for my conclusions, here are four things I've learnt.

1. Speculating about a Ukip/Conservative electoral pact is a waste of time because it is not going to happen. That is not to say I can promise not to write about the prospect. There are a significant number of seats where the Ukip vote in 2010 was higher than the amount by which the Conservative candidate lost and, as the election approaches, there is bound to be some kind of pressure for a deal – either seat-by-seat, or nationally – that would prevent a split in the Eurosceptic vote. But exactly the same kind of discussions took place before the 2010 general election, and they got nowhere. Even David Heathcoat-Amory, who was so Eurosceptic that he resigned as a minister from John Major's government over the issue, could not persuade Ukip to give him a free run. As he recalls bitterly in his memoirs, he thinks this led to him being defeated by the much more pro-European Lib Dem, Tessa Munt. Ukip seems too established as a party to want to contemplate these deals. Nigel Farage made this point in his speech and, if you read what he said about the possibility of a deal, it is fairly clear that he does not expect it to happen.

2. Ukip is not confident about winning an EU referendum. If, like me, you have not spent much time thinking about the difference between a free trade agreement and a customs union, you might think that Ukip (who want Britain outside the EU, but with a free trade agreement) would welcome the fact that the Conservatives want a looser relationship with the EU. But Farage clearly sees this as a threat and the most interesting part of his speech was the passage that dealt with this. (See 1.20pm.) He seems to think Cameron would find it relatively easy to win a referendum about whether Britain should remain in the EU as a member of a customs union.

3. The Conservative split has already happened. Earlier I quoted from an article by Paul Goodman, the former Conservative MP, saying that Farage seeks a fundamental realignment of British politics. But, after a day here, I sense that it has already happened. Ukip activists (with a few exceptions) are members of the broad Conservative tribe. They look like old-school Tories, talk like them and sound like them. Anyone who went to a Conservative party conference before they started to become anodyne in the mid-1990s would feel perfectly at home here.4. Ukip are not just a single issue party. I've heard plenty of Euro-bashing from the platform, but they have got strong views on other topics too. After Farage, the most interesting speaker in the morning was Godfrey Bloom, the MEP who is standing against John Prescott in the elections for police commissioner in Humberside on what could safely be described as a Daily Mail platform: anti-political correctness (there is a post on his blog entitled "Hate crime is not a crime"), pro-motorists (speed cameras would only be allowed near accident blackspots or schools) and pro shooting burglars (Bloom said he would take disciplinary action against any officer who arrested a householder for protecting his family). This is a party with a distinct libertarian agenda. Alexandra Swann, who defected to Ukip from Conservative Future, put it like this in her speech to the conference: "I believe in more than independence from Europe. I believe in independence for the individual."

That's it for today. I'm off for the train. Tomorrow I will be blogging from the Lib Dem conference, starting at around lunchtime.